By,
Anurag Kar
B.Tech. Student
Department of E and ECE
IIT Kharagpur
Based on Chapter 3: Developing Pricing
Strategies and Programs
Of
Marketing Management: A South Asian
Perspective
By Kotler, Keller, Koshy and Jha
Companies may initiate price cuts for various
reasons…
1. Excess plant capacity
2. To dominate the market through lower costs
3. Need additional business which is not being
generated through increased sales effort,
product improvements, etc.
Low prices buy market share
but not market loyalty.
Customers shift to any lower
priced firm that comes along.
Price CuttingTraps
Fragile Market
Share Trap
Higher priced competitors match
the lower prices but have longer
staying powers because of
deeper cash reserves.
Price CuttingTraps
Shallow-Pockets
Trap
Competitors respond by
lowering their prices even more,
triggering a price war.
Price CuttingTrapsPrice War Trap
Company does not set a final
price until the product is
finished or delivered.
Price IncreasingTactics
Delayed Quotation
Pricing
The company requires the
customer to pay today’s cost and
all or part of inflation increase
that takes place before delivery.
Price IncreasingTactics
Escalator
Clauses
The company removes or prices
separately elements that were
part of the former offer.
Price IncreasingTactics
Unbundling
Company instructs its sales
force to not offer the normal
cash and quantity discounts.
Price IncreasingTactics
Reduction of
Discounts
Price IncreasingTactics
Delayed Quotation
Pricing
Escalator
Clauses
Unbundling
Reduction of
Discounts
Although there is a chance that price rise can
carry some positive meanings.
Eg. The item is in demand and represents and
unusually good value…
1. Shrinking the amount of product.
2. Substituting less expensive ingredients.
3. Reducing or removing product features.
4. Removing or reducing product services.
5. Reducing the number of sizes or models offered
6. Creating new economy brands.
Pictures Sourced from:
www.flickr.com
www.pinterest.com
http://commons.wikimedia.org
www.theguardian.com
Fonts Sourced from:
www.fontsquirrel.com
Based on “Marketing Management: A South Asian Perspective”
By Kohler, Kelter, Koshy and Jha
Credits